Jobs Growth Picks Up
May 5, 2005
By Heather Boushey
The unemployment rate remained unchanged at 5.2 percent in April. Payroll employment grew by 274,000 and upward revisions to February and March data show that for the past three months, the economy has added an average of 240,000 jobs per month, up from an average of 182,000 in 2004.
Employment gains were widespread in April. Construction added 47,000 new jobs, with specialty contractors accounting for 40,000 of these jobs. Over the past three months, construction has added 116,000 new jobs, which translates into an annualized growth rate of 6.8 percent. After losing jobs between February and March, retail trade grew by 24,000 jobs. Air transport lost 5,000 jobs, but trucking gained 8,000 and transit and ground transportation gained 4,000 jobs. Leisure grew by 58,000 new jobs, about twice the average during any month in 2004, including 35,300 new restaurant jobs.
Manufacturing, however, has not been adding jobs. Over the past year, manufacturing has lost 15,000 jobs, and last month, the sector lost 6,000.
Strong employment growth is occurring alongside an increase in hours. Aggregate weekly hours increased by 0.9 percent in April, up to an index of 102.8, still below the peak of 103.9 in 2000. Hours in construction grew by 2.8 percent in April, up to 107.9, which is above the previous peak of 105.1 in 2000. In extractive industries (natural resources and mining), hours increased by 1.5 percent, up to an index of 113.2, nearly 10 percentage points above where it was a year ago. The increase in hours may indicate that firms are on the edge of hiring more workers, however, this also implies lower productivity growth since GDP growth appears to be slowing.
Even with strong employment gains, wages continue to lag inflation. Over the last four months, the annualized rate of wage growth was 2.5 percent, well below the rate of inflation, at 3.3 percent. In retail trade, the annualized rate of wage growth over the past quarter was only 0.7 percent and only two industries saw wage growth faster than inflation over the past quarter: information services (5.3 percent) and goods-producing industries (3.5 percent).
The household survey shows signs of improvement in the labor market. The share of the population at work rose from 62.4 to 62.6 percent, still 1.8 percentage points below the 2000 average, but rising. This increase is due primarily to an increase in men's employment. Last year, the share of working-age men in jobs employed rose by 1.6 percentage points, to 72.4 percent, while the employment rate of women only rose by 0.1 percentage point, up to 57.5 percent. Over the past year, men's unemployment rate has fallen from 5.0 to 4.4, while women's unemployment rate has fallen from 4.9 to 4.6.
Older workers continue to add jobs, relative to younger workers. Last month, workers age 55 and over accounted for 72.9 percent of the new jobs, while workers aged 20 to 24 lost 31,000 jobs. This is a long-term trend: over the last year, older workers accounted for 87.3 percent of employment growth, while younger worker's share of employment growth declined by 7.0 percent. The employment gains garnered by older workers are not due to younger workers choosing non-employment; the unemployment rate for older workers was 3.5 percent in April, compared to 8.9 percent among the younger workers.
While the share of long-term unemployment remains high, other labor- market indicators showing improvement in individuals' experiences finding work suggest improvements in job prospects for the unemployed. Among those unemployed, 21.2 percent have been out of work and looking for a job for at least six months, high by historical standards. However, the median duration of unemployment spells dropped in April from 9.3 weeks, where it had been for the past two months, to 8.9 weeks. Further, the number of those employed part-time, but preferring full-time work, fell by 51,000 last month and 264,000 last year. Meanwhile, the share of part-time workers preferring part-time work rose from 80.8 to 82.0 percent over the past year.
Heather Boushey is an economist at the Center for Economic and Policy Research in Washington, D.C.
CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report.